Important Rights provided to the Employees working in Shops and Commercial Establishments

June 12, 2020


This article is written by Atif Ahmed, an advocate pursuing Diploma in M&A, Institutional Finance and Investment Laws from Lawsikho. In this article, the author discusses about the rights given to the employees working in shops and commercial establishments.


The lockdown necessitated by the Covid-19 has not only impacted the Companies, but it has also miserably impacted the shops and commercial establishments across the country. These shops and commercial establishments, for example, residential hotels, restaurants, theatres, other retail shops etc, have either seen little, or no business in these past few months. Also, these shops don’t have the kind of capital or investors that the companies usually have, and often these operate at smaller margins, and hence lesser profits, as compared to the big companies, and hence these are more severely impacted. 

This pandemic has caused recession across the world, and the economists believe that this is only going to worsen up in the coming future. Millions of jobs across different industries are going to be affected, and even the jobs of the employees working at the shops and commercial establishments across the country, are not going to be spared. Loss of income is going to force the employers to terminate the employment of their employees, now more than ever. 

The employment of the employees working in the companies is often regulated by the Employment Agreement, which provides protection to the employees. However, the employees working at the shops and commercial establishments often do not enter into any Employment Agreement. So it becomes imperative to know if there is any legislation that provides protection to the employees in such cases. 

Shops and Commercial Establishment Acts, which are state-wise legislations regulate the employment of employees working at Shops and Commercial Establishments, across the country. 

NOTE: In this Article we shall discuss the rights provided to the employees by The Punjab Shops and Commercial Establishments Act, 1958, (Herein referred to as ‘ACT’) which is applicable to the State of Punjab and Haryana. It is worth noting that the rationale and the provision of the all State Shops and Commercial Establishment Acts are similar to much extent. 

Shops and Commercial Establishments Acts 

What is the objective of the legislation? 

One of the important legislation to which most businesses in India are subject to, is the Shop and Establishment Act, enacted by every state in India. The Act is designed to regulate the payment of wages, hours of work, leave, holidays, terms of service and other work conditions of people employed in the shop and commercial establishments. 

What are shops and commercial establishments?

The Shop and Establishment Act in India is promulgated by the state and may slightly differ from state to state. However, as per the Act, all shops and commercial establishments operating within each state are covered by the respective Shop & Establishments Act. 

Shops are defined as premises where goods are sold either by retail or wholesale or where services are rendered to customers and includes an office, a store-room, godown, warehouse or workhouse or workplace. 

Establishments are defined as shops, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment. Further, establishments, as defined by the act, may also include such other establishments as defined by the Government by notification in the Official Gazette. 

However, factories are not covered by the shops & establishments act and are regulated by the Factories Act, 1948. 

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Aspects Regulated by the Shop and Establishment Act 

The Shop and Establishment Act regulates a number of aspects relating to the operation of a shop or commercial establishment. Some of the key areas regulated by the shop and establishment act include: 

Let us now discuss the important rights provided to the employees by The Punjab Shops and Commercial Establishments Act, 1958 (Herein referred to as ‘ACT’)

What are the rights of the employees working in shops and commercial establishments? 

  1. Descent hours of Employment (Section 7) 

  1. Proper intervals for Rest and Meals (Section 8) 

  1. Conditions for Employing Young Persons (Section 6) 

What about the persons who have not attained the age of 14 years? According to section 29 of the Act, employment of such persons by the employers is prohibited. 

  1. Entitlement of ‘day off’ in a week (Section 11) 

No employee shall be required to work- (a) on a closed day, in any establishment which is required to observe a closed day; and (b) on one day in a week, in any other establishment; and (c) before the opening hour of the establishment and after closing hour of the establishment (However, a watchman may be required to work even on an off day, but he must be allowed another off day in the week.) 

What is the meaning of closed day? ‘Closed Day’ means the day of the week on which a shop or commercial establishment remains closed. 

  1. Right to Holidays or Double Wages (Section 12) 

Every employee in an establishment shall be allowed – (a) a holiday on the Independence day, Republic day, and Mahatma Gandhi’s birthday and they shall be paid wages for the same; and (b) 3 other holidays (with wages) in a year in connection with such festivals as the Government may declare from time to time; and (c) However, if an employee is required to work on any such holiday, then he should be paid remuneration at double the rate of his normal wages calculated by the hour

  1. Right to take Leave(s) (Section 14) 

Provided that- a young person shall be entitled to one day’s earned leave for every fifteen days of employment during the year. 

Provided that— (i) The total number of days of leave that may be carried forward to a succeeding year shall not exceed 30. (In the case of a young person, the total number of days of leave that may be carried forward to a succeeding year shall not exceed 40). (ii) Where the employer and the employee have entered into a contract or agreement of service which provides for a longer leave with wages or weekly holidays, then the employee shall be entitled to that. 

(Notwithstanding rights of leave as discussed above, every employee in an establishment shall be allowed 7 days casual leave and 7 days sick leave in a year, along with wages.) 

  1. Period during which the wages are to be paid (Section 16) 

  1. Right to be given Notice before Removal (Section 22) 

No employee shall be removed from the service unless and until either one month’s previous notice or one month’s pay in lieu thereof has been given to him. 

However notice/pay is not required to be given in the following cases: (a) if the employee is removed on account of his misconduct, or (b) If he has not been in the service for a continuous period of three months. 

What happens in case the employee is removed without giving him notice/pay? In such a case, the Judicial Magistrate can award compensation to the employee equivalent to two month’s salary. However, such claim shall be entertained only if it is preferred by the employee within six months from the date of his removal. 

  1. Rights of Women Employees 

Condition of Employment: (Section 30) 

Maternity benefits: (Section 31)

Every woman who has been continuously employed in the establishment for a minimum period of 6 months preceding the date of her delivery, shall be entitled to receive a payment of maternity benefit (which shall be prescribed by the Government) for: six weeks immediately preceding the day of her delivery; and the day of her delivery; and six weeks following the delivery. 

(Provided that no such payment shall be made for any day on which she attends work and receives payment thereof during the six weeks preceding her delivery.) 

Can an employer fire his employee at his will? Is there any remedy available to the employee in such a case? 

Can an employee quit the services of his employer at his will? 

Can the employer and the employee enter into an employment agreement? If yes, will it override the provisions of the Shops and Commercial Establishment Acts? 


The State-wise Shops and Commercial Establishment Acts provide important rights to the employees working in the shops and commercial establishments across the country. However, the biggest issue is the lack of awareness among these employees, which leads to their exploitation by their employers. These employees are often made to work for long hours without any interval of rest, are not given as much leaves as they are entitled to, are made to work overtime, without any extra wage, and most importantly are fired suddenly at the will of their employer, without giving any wage. And these people suffer without a voice. The plight could only be improved with awareness. 

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